‘Radical’ review of business rates underway

A “radical” review of the business rates system has been launched which could pave the way for changes to how businesses across England pay tax, the Treasury has said. 

The review, which is set to report back for the Budget in 2016, will examine the structure of the current system which is paid annually on 1.8 million properties in England.

The review will look at how businesses use property, what the UK can learn from other countries about local business taxes, and how the Treasury can modernise the system so it better reflects changes in the value of property.

Danny Alexander, chief secretary to the Treasury, said: “Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.

“The government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective.”

The review was first announced in December’s Autumn statement, when the government said it would implement a £1bn package to reduce the cost of business rates in 2015 to 2016, with particular support for the smallest businesses and the high street.

Measures being introduced on 1 April will see business rate relief for small businesses doubled over the next year, a cap of 2% on business rate increases and business rate discounts for smaller premises increased.